Understanding innovation: A key step in drafting efficient financing programs
The COVID -19 pandemic has upended normal life by impacting every single person, country, industry, and business. It has forced all of us to reassess the ‘old normal’ and pushed for the design of the ‘new normal’. While every crisis can be turned into an opportunity, never ever has the time been more ripe for advancing innovation to generate a new reality. The health crisis builds on top of global economic competition powered by emerging technologies such as artificial intelligence and blockchain and coincides with a serious and steady acknowledgment that climate change adaptation measures are urgent.
Today’s unprecedented challenges fuel the leap to tomorrow
Based on our diverse yet cross-sectional sectoral understanding of the fields of innovation and emerging technology, respectively, it is our belief that mitigating the challenge of our time will require us to make this global health crisis fuel the next developmental chapter.
Governments across the world are already taking measures to issue strategic documents, design programmes and sanction large amounts of funds in order to push for changes through innovation. Innovation is expected to generate new industries, new markets, new jobs, and–in the end–a new reality with emerging champions and (quite possibly) a new international political order.
Thus, unpacking the innovation conundrum is both timely and necessary as it takes the stage as a key driver of growth and wellbeing. A clearer understanding of the process is imperative for a timely and efficient allocation of funds. As the World Bank states, “financing is pivotal to innovation because it allows organizations to conduct research, adopt technologies necessary for inventions and develop and commercialize innovations”.
Innovation vs invention?
Any proponent of innovation should be aware of the difference between innovation and invention.
Often used interchangeably, these two terms, while inter-connected, follow different processes and stages. Invention is the act of creating something new to solve a problem. Invention becomes innovation when it is taken to market successfully.
Source: www.medium.com, Demystifying Innovation: What is it & isn’t
To sum-up, using Jamie Notter’s words, “innovation is change that unlocks new value.”
Can one define innovation, or is that futile, due to the uncertainty surrounding both the innovation process and its results?
Currently, there are two opposing narratives that are influencing policy-making and funds allocation at regional and national levels.
The Serendipity Approach is promoted by Matt Ridley, the author of How innovation works and a member of the House of Lords in the UK Parliament. He argues that “it is little known why and how innovation happens. Let alone predict when and where it will happen”. In his view innovation is unpredictable and unplannable, yet it flourishes in the right environment under catalytic conditions usually present in liberal economies.
The Organized Approach represented by Marianna Mazzucato, the special advisor for the EC Commissioner for Research, Science and Innovation (2017-2019), author of the high impact report on Mission-Oriented Research & Innovation in the European Union, turning “missions” into a crucial new instrument in the European Commission’s Horizon innovation programme. This approach puts the state and intergovernmental actors at the centre as coordinators of all efforts to generate innovation in response to a pressing societal problem.
Reality check: testing the narratives in a round table debate
At the STG, we put these two approaches to the test in a round table debate, part of the Policy Leader Fellows Talk 2021 Series, that united experts from academia, business, tech, and policy research from three continents. They shared their professional opinions on the post-pandemic innovation world and presented their perspective on ways to design and finance innovation.
Susana Borrás, Professor at Copenhagen Business School and author of the book Holistic Innovation Policy, advocates for the systemic approach and a critical analysis of policy tools as a “necessary stepping stone for the identification of viable, relevant, and down-to-earth policy solutions”.
Sharat Chandra, Blockchain & Emerging Tech Evangelist, keynote speaker & ecosystem builder lends his support to various state governments in India in capitalizing on current tech trends and opportunities. He is a champion of the business-government collaboration.
Marvin LIAO, Partner & Board member at Game Groove Capital, Former Partner at Venture Capital Fund 500 Startups, is an active investor in innovative startups and thus well aware of the overall framework within which companies activate the opportunities shaped by regulations or even the obstacles raised by strategic political priorities. In his view, innovative companies thrive globally and this comes at odds with limitative national policies.
Philippe LARRUE, OECD policy analyst at the Directorate for Science Technology and Innovation, also joined us. He manages the study into the design and implementation of mission-oriented innovation policies (MOIPs). He notes that “MOIPs are not a silver bullet to solve societal challenges but they offer at national level a dedicated and tailor-made space for collective action adapted to each challenge area and national institutional setting. Within that space, public and private partners can co-create the objectives and targets (the ‘mission’), set up a specific structure of governance and, finally, design and implement an intentional policy mix.”
The eclectic panel illustrated the day-to-day work of a policy-maker: mixing and matching perspectives, testing theories and learning continuously from practice, navigating opposing perspectives and accommodating divergent interests.
Going beyond the theoretical extremes we should not forget that all innovation models are post-factum rationalisation of present results, making sense of reality after it has happened. The innovation conundrum has no sole answer as innovation is both a process and a mindset.
Moreover, the frameworks we use to approach this process transpire into the financing policies we implement. By adopting a critical perspective on the available theoretical approaches and policy tools, understanding the dynamics at play in the domestic culture, balancing the need for micromanagement with a laissez-faire approach, we may surpass most of the policy fallacies, overcome biases, and aim for feasible pilot projects to be then turned into scalable policies.
Finally, we can agree that financing innovation is in fact an investment in our future and smart investments pay off exponentially. Unpacking innovation is just the first step.